RoseFellow buys ind. land in the West Island of Montreal, in Ottawa | RENX

RoseFellow spent $70 million to acquire a 1.35 million square foot industrial site from the town of Kirkland, which the developer says is the last virgin site in the West Island of Montreal.

The company has also acquired a smaller 15-acre industrial development property in Ottawa and plans to begin construction on this site soon as well.

RoseFellow plans to build three or four Class A industrial buildings of 100,000 to 200,000 square feet each on the Kirkland site, at the northwest corner of Saint-Charles Boulevard and Autoroute 40 (Trans-Canada Highway) for a total development cost of $175 million.

The city of Kirkland, in a statement on Tuesday, pegged the overall cost of the project at around $300 million.

Construction could begin as early as next spring, with the first building being completed eight to ten months after construction begins.

RoseFellow partner Sam Tsoumas said “at a minimum” a LEED-certified development will be built and the project could end up being net zero carbon.

The site is “highly visible, with great visibility, a beautiful facade. For us alone, this is a trophy property,” he said. Given the popularity of industrial real estate in the West Island, “finding a greenfield site that is actually ready for construction is almost unheard of.”

“Through the roof” demand in the West Island

Tsoumas said Quebec’s top echelon of industrial developers were brought to the table by the town of Kirkland to submit financial bids and development ideas.

The process began almost a year ago and RoseFellow was selected after many rounds of discussion.

“Seventy million dollars for 1.35 million square feet is about the maximum you’ll see in the market today,” Tsoumas said, noting that it’s the largest foot transaction. square made by RoseFellow.

“We’ve probably set the bar for land values ​​now,” he noted, but “we’re very comfortable with the price we paid. We really think this site is worth it.

Demand is “through the roof” for properties in the West Island, given its easy access to the Ontario border, the South Shore and Laval, said RoseFellow’s other partner, Mike Jager.

He thinks the site is likely to attract tenants who are looking for visibility in a job center and who are able to pay in the upper tier of rental rates.

Acquiring Property in Ottawa

This Dealership Drive location in Ottawa, recently acquired by developer RoseFellow, is close to Amazon Ottawa’s massive new fulfillment center. (Courtesy of RoseFellow)

RoseFellow also spent $20 million to acquire a 650,000 square foot site on Dealership Drive across from Highway 416 in Ottawa’s Nepean area from a private ownership group.

Construction should begin within 18 to 24 months – once the permits are in hand – of a 320,000 to 350,000 square foot industrial building that will be built on specifications for several tenants. The total estimated cost of the project, including land, is $87 million.

“We’re completely in love with the site,” Tsoumas said, noting that it’s near an Amazon fulfillment center and “greatly located” for a job hub.

“We’ve had a number of inquiries from people who have passed by the Ford distribution center we’re building in Casselman, Ont., and asked if we have a location nearby,” Jager said. “It opened our eyes to finding other opportunities.”

Funds behind properties

The Kirkland and Ottawa properties are funded in part by RoseFellow’s second $100 million fund, RF Fund II. The fund specific to industrial development focuses on the metropolitan region of Montreal, Quebec City and Ontario.

It follows RoseFellow’s first fund, which opened in March 2021.

Tsoumas said there will be limited amounts of specific industrial space coming to market over the next few years, “so we felt the time was right to launch an additional $100 million.”

Leveraging the $100 million will provide around $400 million to $500 million of development across four or five projects, he said, and “obviously the market can accept that.”

Investors in the first fund, including Skyline and Fit Ventures, have agreed to participate in the second fund.

“Our first group was very pleased with the overall results of Fund I and its trend,” Tsoumas added.

RoseFellow significantly increased its own stake in the second fund and opened it up to outside investors.

Despite rising interest rates, the opportunity is still ripe for industrial development, Tsoumas said, given unprecedented space shortages.

Interest rates are still relatively low and demand for the industrial space market does not seem to be slowing down.

“Rental rates are also increasing to counter the increase in cap rates, so the returns are similar, there’s not a lot of space, tenants are moving in to sign these leases incredibly quickly,” Tsoumas said.

“We barely install steel on site and we already have three, four offers on each of our sites, and we are talking about multinationals with big commitments.

“Our investors at RoseFellow are optimistic that the market will be strong over the next five years.”